Pool corporATION Is the worlds largest wholesale distributor of swimming supplies and equiopment. It sells these products to swimming pool repair and service businesses like Penny pool service and supply inc.,swiming pool builders and retail swimming pool stores. The majority of these customers are small family -owned business like Penny's. It's adjusted trial balance listed in alphabetical order as of December 31,2014 is presented below. All numbers are in the Thousands.
Accounts Payable - $177,437
Accrued expenses and other current liabilities - 53,398
Additional Paid in Capital - 173,180
Advertising - 6,523
Cash and Cash equivalents - 17487
Common stock - 47
Cost of Sales - 1,261,728
Current portion of long term debt - 22
Depreciation - 75,000
Insurance -85,000
Intangible Assets- 188,841
Interest Expense - 7,755
Long Ternm Debt- 247,300
Net Sales - 1,793,318
Other long term Liabilities - 40,719
Other noncurrent assets , net - 30,386
Prepaid expenses and other current asstes - 23,035
Product inventories, net - 386,924
Property and Equipment, net - 41,394
Provision for income taxes - 45,319
Recievables, net - 110,555
Retained Earnings - 34,526
Salaries - 175,000
Supplies Expense - 65,000
A: Prepare a Multiple step income statement for 2014.
Problem 2
Pearl E White orthodontists specializes in correcting missaligned math. During 2015, Pearl provides services on account of 590,000. Of this amunt 80,000 remains recievable at the end of the year. an aging schedule as of December 31, 2015 is provided below.
Aged accounts recievable $ Estimated % uncollectable Estimated amount uncollectable
Not yet due 40,000 4% ?
Up to 90 days 16,000 20% ?
91-180 days 11,000 25% ?
Over 180 days 13,000 80% ?
Total 80,000 ?
A: Calculate the total estimate ammount uncollectable by filling in the grid above.
B: Record the December 31,2015 adjustment assuming the balance of Allowance for Doubtful Accounts before adjustment is $5,000 (credit)
C: Assume the same information presented in part B. Expect that prior to adjustment, the allowance for doubtful accounts had a debit balance of 5,000 rather than a credit balance of 5,000. Record the December 31, 2015 adjustment.
D: On July 19, 2016 a customers account balance of 8,000 is written off as uncollectible. Show the journal entry to record the write-off.
Problem 3
Petes Tennis Shop has the following transactions related to its top sellign Wilson tennis racket for the month of August 2015:
Date Transactions Units Costs per unit
8-1 Beggining inventory 8 160
8-4 Sale (225 Each) 5
8-11 Purchase 10 150
8-13 Sale (240 Each) 8
8-20 Purchase 10 140
8-26 Sale (250 Each) 11
8-29 Purchase 11 130
A: Complete the table below for LIFO, FIFO, average cost and specific identificaion. Round to nearest dollar. For specification identification the august 4 sale consists of rackets from begining inventory, the August 13 sale consists of rackets from the August 11 purchase, and the august 26 sale consits of one racket from the begining inventory and 10 rackets from the August 20th purchase.
LIFO (Units) (Money) Fifo (Units) (Money) Average Cost (Units) (Money) Special ID (units) (money)
Beggining inventory
purchases
Goods available for sale
Ending Inventory
Cost of Goods sold
Gross Margin
B: Which method results in the higher pretax income Lifo or Fifo?
c: Which method results in lower income tax expense assuming a 30% tax rate? Lifo or Fifo
d: Which method resuklts in the more favorable cash flow ( LIFO or Fifo) please explain why
Problem 4
Logn term assets Cost
Land 95,000
Building 460,000
Equipment 235,000
Patent 250,000
The solich sandwhich shop has the follouing long term assset balance as of december 31, 2015. (above) Solich purchased all the assets at the begining of 2013 3 years ago. The building is depreciated over a 10 year service life using double - decling - balance method and estimatiing no residual value. The equipment is depreciated over a nine year useful life using the straight line method with an estimated residual value of 10,000$. The patent is estimated to have a 5 year service life with no residual value and is amortized using the straight line method.
A: Calculate the buildings depreciation expense fro 2013,2014, and 2015
B: Record the journal entry for the building's depreciation expense for 2015.
C: Calculte the equipment's depreciation expense for 2013,2014, and 2015.
D Record the journal entry for the equipment depreciation expense for 2015
E Calculate the patents amortization expense for 2013, 2014, and 2015.
F Record the journal entry for the amortization expnse for 2015.
G: Calculate the book value for each of the four long -term assets at December 31, 2015.
H: Assume solich sells all of the equipment for 110,000 in cash on January 1, 2016. Show the journal entry for this dispostiion.
I: At the end of the 2015, after amortization had been recorded through December 31, 2015, Solich concluded that the estimated future cash flows from the patent to be 75,000$. The patents estimated fair value on December 31, 2015 was 90,000$. Prepare the journal entry to record the patent impairment, if necessary.